Hustler Club may be reborn as office condos

A preliminary deal to buy the block-long erotic-entertainment spot along the West Side Highway has been reached. Buyers want to erect a roughly 240,000-square-foot office and studio building geared to (a different segment of) the entertainment industry.

The Hustler Club at 630 W. 52nd St. may be turned into office condos.Photo: CoStar Group Inc.

Larry Flynt's Hustler Club may soon have its last dance. Developers Jack Guttman and Steve Schwartz have reached a preliminary deal to buy out the block-long erotic entertainment spot along 12th Avenue between West 51st and West 52nd streets. The pair is planning to erect an eight-story building on the site.

"We've reached a deal in the last three weeks to buy them out," said Alan Weisman, a leasing and sales broker at Lee & Associates, who is representing Mr. Guttman and Mr. Schwartz in the effort to acquire the land to build the property and also fill it with tenants.

The developers envision a roughly 240,000-square-foot office and studio building geared to the entertainment industry including television and film production tenants. Mr. Weisman said that several would-be tenants from that sector are considering the new development, which would be one of the few properties in the city tailor-made for such users to rise in recent years.

Space in the project will be sold as office condominiums, Mr. Weisman said. That makes it more attractive to production tenants than for-rent offices because of the significant capital they must spend to outfit studio space and related facilities. In a conventional rental agreement, that investment is at stake when their lease expires if the landlord raises their rent and they have to relocate.

"These tenants have to make a significant investment in building their studios and they don't want to be in the position where they have a landlord who, in a few years, can raise their rents," Mr. Weisman said. "It's a unique idea to build this type of state-of-the-art studio space where you can own it and protect your investment."

To build the property, which will fill the entire block between West 51st and West 52nd streets, along 12th Avenue and stretch 200 feet from the avenue, Mr. Guttman and Mr. Schwartz have entered into several agreements to buy out existing landlords who own property in the building's footprint. They will exercise those acquisition rights, Mr. Weisman said, as soon as they secure an anchor buyer for one of the office condo units in the project. Mr. Weisman said the developers are willing to start construction if they can presell at least 35,000 square feet of its space.

Mr. Guttman has experience building new office condo space. He was one of the developers of the Chelsea Arts Tower, an office condo building on West 25th Street that was finished in 2006. That project sold out to a host of tenants in a string of sales that demonstrated that businesses in several industries saw the virtues of owning instead of renting.

"If anyone has the ability to do a project like this it's Jack Guttman," said Michael Rudder, a broker who specializes in office condo sales and is an expert in that market. "It seemed like a daring move to build the Chelsea Arts Tower but that was a huge success."

The Hustler Club appears to have motivation to cash out. According to reports, the strip club was found to owe $2.1 million in back taxes. Mr. Weisman said that several prospective buyers in the new studio building, which will carry the address 630 W. 52nd St., were relieved the Hustler Club was leaving.

"Many weren't interested in buying space in the building if the club was going to be next door," Mr. Weisman said.

wrote on 08/10/14 at 2:25 PM

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